Medicare can feel confusing, especially if you are new to it or reviewing your plan during open enrollment. The truth is, Medicare is split into different parts because each one is designed to cover specific needs. Instead of giving you one large, complicated plan, Medicare lets you select together the coverage that makes the most sense for your health and budget. If you are wondering what all the letters mean, here is a simple breakdown.
Why does medicare have different parts
The reason Medicare has different parts is so you can choose the type of coverage you want. Not everyone needs the same care. Some people may only need hospital coverage, while others may want prescription drug benefits or a more complete plan through a private insurer.
Think of it as building blocks—here is a breakdown of each part:
- Part A is hospital coverage.
- Part B is medical coverage for doctor visits and outpatient care.
- Part C is Medicare Advantage, which combines Parts A and B and often includes extras.
- Part D is prescription drug coverage.
- Medigap is supplemental insurance that helps with costs not covered by Parts A and B.
What does Medicare Part A cover
Medicare Part A is hospital insurance. It helps cover inpatient care in hospitals, skilled nursing facilities, hospice care, and some home health services. This means:
- If you worked and paid Medicare taxes for at least 40 quarters (about 10 years), you do not pay a monthly premium for Part A.
- In 2025, the deductible is $1,676. You also pay coinsurance if your hospital stay goes beyond 60 days.
One important thing to know is that Part A does not cover long-term custodial care, like help with bathing or dressing over an extended period.
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What does Medicare Part B cover
Medicare Part B is medical insurance. It pays for doctor visits, outpatient care, lab tests, durable medical equipment, and preventive services. In 2025, the deductible is $257 and the base monthly premium is $185. After the deductible, you usually pay 20% of the cost of these services.
If you do not sign up when you first become eligible at age 65, you may face a penalty. The penalty is 10% of the monthly premium for every year you delayed enrollment, unless you had employer coverage.
Part B does not cover routine dental, vision, or hearing care, except in special situations tied to medical conditions.
What is Medicare Part C
Medicare Part C is better known as Medicare Advantage. These are plans offered by private insurers that replace original Medicare (Parts A and B). Most Medicare Advantage plans include prescription drug coverage and often come with extra benefits like dental, vision, and hearing. For 2025, the average monthly premium is $17.
One drawback is that you are usually limited to a network of doctors and hospitals. Some plans also require prior authorization before you get certain treatments.
What does Medicare Part D cover
Medicare Part D is prescription drug coverage. It is provided through private insurers and can be added to original Medicare. If you already have a Medicare Advantage plan with prescription drug coverage, you do not need Part D separately. In 2025, the average monthly premium is about $46.50 and if you delay enrolling, you may face a penalty of 1% of the premium for every month you did not have coverage.
Starting in 2025, out-of-pocket drug costs are capped at $2,000. For 2026, the cap will rise slightly to $2,100.
What is Medigap coverage
Medigap is private insurance that helps cover costs original Medicare does not pay, such as deductibles, coinsurance, and copayments. There are 10 Medigap plans, each labeled with a letter. Plans with the same letter must offer the same benefits, though prices can vary by company.
Also, Medigap plans generally have higher monthly premiums than Advantage plans, but they can save you money if you need frequent care, and you have a six-month window after enrolling in Part B to choose any Medigap plan. After that, insurers may deny you coverage or charge more based on your health.
